MANAGEMENT Part Four: The Organizing Process TWELFTH EDITION MANAGEMENT Ricky W. Griffin Part Four: The Organizing Process Chapter Ten: Basic Elements of Organizing © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Outcomes Identify the basic elements of organizations. Describe the basic alternative approaches to designing jobs. Discuss the rationale and the most common bases for grouping jobs into departments. Describe the basic elements involved in establishing reporting relationships. Discuss how authority is distributed in organizations. Discuss the basic coordinating activities undertaken by organizations. Describe basic ways in which positions within an organization can be differentiated. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Elements of Organizing Deciding how best to group organizational activities and resources. Organization structure The set of elements that can be used to configure an organization. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Elements of Organizing Designing jobs Grouping jobs Establishing reporting relationships Distributing authority Coordinating activities Differentiating among positions There are six basic building blocks managers use in constructing an organization. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Designing Jobs Job design Job specialization is the determination of an individual’s work-related responsibilities. Job specialization is the degree to which the overall task of the organization is broken down and divided into smaller component parts. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Benefits of specialization Limitations of specialization Designing Jobs Benefits of specialization Limitations of specialization Workers become proficient at task. Transfer time between tasks decreases. The narrow job definition allows for specialized equipment. Training costs are relatively low. Worker boredom and dissatisfaction. Can lead to higher absenteeism and lower quality of work. Anticipated benefits do not always occur. Managers should avoid extreme specialization. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Designing Jobs Alternatives to Specialization Job characteristics approach Job rotation Job enlargement Work teams Job enrichment Due to drawbacks of specialization, many firms sought alternative approaches to job design. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Alternatives to Specialization Job rotation involves systematically moving employees from one job to another. Can increase flexibility and lower costs but jobs are still boring and satisfaction quickly wanes. Job enlargement increases the total number of tasks workers perform. Though positive consequences happen, training costs increase, unions argue for more pay, and work remains boring. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Alternatives to Specialization Job enrichment increases both the number of tasks and the control the worker has over the job. Needed changes not usually made for successful implementation. Work teams allows an entire group to design the work system it will use to perform an interrelated set of tasks. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Alternatives to Specialization The job characteristics approach suggests jobs be diagnosed and improved along five core dimensions. Skill variety, number of things a person does in a job. Task identity, the extent to which the worker does a complete or identifiable portion of the total job. Task significance, the perceived importance of the task. Autonomy, the degree of control the worker has over how the work is performed. Feedback, the extent to which the worker knows how well the job is being performed. Growth-need strength affects how the model works. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

People with high growth-need respond strongly to this alternative. Figure 10.1 Job Characteristics Approach People with high growth-need respond strongly to this alternative. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Grouping Jobs Departmentalization is the process of grouping jobs according to some logical arrangement. The rationale is linked to size. As growth occurs, the owner-manager can no longer oversee all workers. New managerial positions oversee workers grouped according to some plan. The logic in such a plan is the basis for all departmentalization. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Bases for Departmentalization Figure 10.2 Bases for Departmentalization Product Function Customer Location The four most common bases are; function, product, customer, and location. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Common Bases for Departmentalization Functional departmentalization groups jobs by the same or similar activities. Most common in smaller organizations. Advantages include: Each department is staffed by experts. Facilitates supervision – narrow set of skills. Ease of coordinating activities inside departments. With growth, disadvantages emerge. Decision making slows and becomes bureaucratic. Employees lose sight of the organization as a system. Accountability and performance are difficult to monitor. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Common Bases for Departmentalization Product departmentalization groups activities by products or product groups. Larger businesses adopt this form. Three major advantages Activities across products are integrated and coordinated. Enhances speed and effectiveness of decision making. Improves department accountability. Two major disadvantages Managers may lose focus of the organization as a whole. Raises administrative costs. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Common Bases for Departmentalization Customer departmentalization groups activities to respond to and interact with specific customers or customer groups. The basic advantage is the organization’s ability to use skilled specialists to deal with unique customers. One set of skills evaluates business loans, another evaluates car loans. A fairly large administrative staff is required to integrate activities of various departments. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Common Bases for Departmentalization Location departmentalization groups jobs based on geography. Primary advantage An organization’s can easily respond to unique customer and environmental characteristics in various regions. Primary disadvantage A larger administrative staff is required to keep track of units in scattered locations. Other forms of departmentalization include time and sequence. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Grouping Jobs Other considerations about job grouping Common synonyms for department include: divisions, units, sections, or bureaus. Any organization may employ multiple bases of departmentalization, depending on level. The role of social media is beginning to impact departmentalization. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Establishing Reporting Relationships The basic issues in establishing reporting relationships: Clarifying the chain of command The span of management © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Establishing Reporting Relationships Chain of command A clear and distinct line of authority among positions in the organization. Comprised of two components: Unity of command Each person has a clear reporting relationship to one boss. Scalar principle A clear and unbroken line of authority from lowest to highest position. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Narrow Versus Wide Spans Span of management (also span of control) is the number of people who report to a particular manager. A. V. Graicunas quantified span of management. Managers deal with three kinds of interactions: Direct – manager’s one-to-one relationship with workers. Cross – subordinates relationship among themselves. Group – relationships between groups of subordinates. I = N(2N/2 + N – 1) I is the number of interactions with and among subordinates and N is the number of subordinates. Each additional subordinate adds more complexity than the previous one. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Narrow Versus Wide Span Ralph C. Davis described two spans: An operative span – up to 30 subordinates For lower-level managers An executive span, limited to nine For middle and top managers Lyndall F. Urwick and General Ian Hamilton concluded the executive span should never exceed six subordinates. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Tall versus Flat Organizations Figure 10.3 Tall versus Flat Organizations © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Factors Influencing the Span of Management Table 10.1 Factors Influencing the Span of Management Competence of supervisor and subordinates (the greater the competence, the wider the potential span) Physical dispersion of subordinates (the greater the dispersion, the narrower the potential span) Extent of nonsupervisory work in manager’s job (the more nonsupervisory work, the narrower the potential span) Degree of required interaction (the less required interaction, the wider the potential span) Extent of standardized procedures (the more procedures, the wider the potential span) Similarity of tasks being supervised (the more similar the tasks, the wider the potential span) Frequency of new problems (the higher the frequency, the narrower the potential span) Preferences of supervisors and subordinates © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Distributing Authority Power legitimized by the organization. Delegation The process by which managers assign work to subordinates. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Distributing Authority Delegation The primary reason is to allow the manager to get more work done. The process involves three steps: The manager assigns responsibility or tasks. The manager gives authority needed to do the job. The manager establishes accountability. Problems arise when managers are unwilling or unable to delegate. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Steps in the Delegation Process Figure 10.4 Steps in the Delegation Process © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Distributing Authority Decentralization and centralization Decentralization systematically delegates power and authority to lower-level managers. Centralization systematically retains power and authority in higher-level managers. Determinates include: external environment, complexity and uncertainty, history, riskiness of the decision, and abilities of lower-level managers. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Coordinating Activities The process of linking the activities of the various departments in the organization. Coordination The primary reason for coordination is the interdependence of departments and work groups for information and resources. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Coordinating Activities Interdependence comes in three forms Pooled interdependence occurs when units operate with little interaction, their output is pooled at the corporate level. The lowest level of interdependence. Sequential interdependence occurs when the output of one unit becomes the input for another in a sequential fashion. Moderate interdependence, usually one way. Reciprocal interdependence exists when activities flow both ways between units. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Coordinating Activities Structural coordination techniques Use the managerial hierarchy, place one manager in charge of interdependent units. Rules and procedures for routine activities. Managers in liaison roles coordinate units. Task forces for complex interdependence. Integrating departments is usually permanent. Technology enables coordination © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Differentiating Between Positions In the direct chain of command, responsible for achievement of organizational goals. Line position Provides expertise, advice, and support for line positions. Staff position The last building block of organization structure is differentiating between line and staff positions. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Differences Between Line and Staff Purpose Line managers work toward organizational goals while staff managers advise and assist. Authority Line authority is formal while staff authority may take many forms. Advise authority – manager chooses to seek input, or not. Compulsory advice – must consider advice, not heed it. Functional authority – formal and legitimate authority. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Differentiating Between Positions Administrative intensity is the degree to which managerial positions are concentrated in staff positions. High administrative intensity is an organization with many staff positions relative to line positions. Low administrative intensity reflects more line positions. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Summary This chapter discussed the basics of organizing and organizational structure. The text outlined six building blocks used by organizations and discussed each. Designing jobs and grouping jobs. Establishing reporting relationships. Distributing authority. Coordinating activities and differentiating among staff and line positions. © 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.